| 14 March, 2018

Oman evaluating PPP advisory bids for mineral railway

Minerals Development Oman study to help establish bankable mineral reserves for the mineral line.

Saudi labourers work at Maaden Aluminium in Ras Al Khair, Saudi Arabia. Image used for illustrative purpose.

Saudi labourers work at Maaden Aluminium in Ras Al Khair, Saudi Arabia. Image used for illustrative purpose.

REUTERS/Faisal Al Nasser

Oman Rail is evaluating bids for a tender to provide public private partnership (PPP) advisory services for its proposed Mineral Line railway, a top company official said.

The state-owned company issued a PPP advisory services tender for the Mineral Line railway operation in December last year, with a January 2018 bid submission deadline as part of its plans to explore the PPP option for funding the project.

"This fit-for-purpose railway line will move gypsum and limestone from the mineral-rich areas of Dhofar [governorate] up into the port of Duqm. We are going through the tender evaluation process for a PPP advisory consultant to help us assess and set it up if it benefits Oman," said Philip Marquis, director of rail development of Oman Rail on the sidelines of a railway event in Dubai on Monday.

He didn't give a specific timeline for the contract award.

In September 2017, local English language newspaper Oman Daily Observer reported that the Mineral Line is expected to be a single-track railway extending from Thamrait in Dhofar to the Port of Duqm via the mining hubs of Al Shuwaymiyah and Manji.

Marquis told Thomson Reuters Projects that Minerals Development Oman (MDO), the investment and licensing arm of Public Authority for Mining (PAM), is carrying out a study to establish the quality and quantity of mineral resources in the ground, which will help the development of a bankable PPP structure for the Mineral Line.

"We know there is lot of really high quality gypsum in that area. But they have to go out and establish how much is there; and then is it marketable? Can they get it to market? MDO is working on that now, to take it from a resource through the proper processes to a bankable reserve," he explained.

Western Australia's Pilbara heavy-haul railway system, which is privately owned and operated by mining companies for shipping iron ore for export is expected to serve as the model for the Mineral Line.

"We are following somewhat the Pilbara model in terms of long trains and 40-tonne heavy axle loads to make it financially feasible to move the minerals," the Oman Rail official said.

He said the project would be "totally compatible with the GCC Rail standards."

"When the GCC railway connects to this area of Oman Rail, it will be fully compatible and interoperable, in terms of gauge, locomotives and wagons."

The first phase of the GCC railway, which will link the UAE, Saudi Arabia, Oman and Qatar, is scheduled to complete by December 2021.

Speaking at an earlier panel discussion, Marquis said the approximately 500km-long Mineral Line would be designed to handle heavier products with GCC Railway guidelines serving as the minimum.

He also said that Oman Rail is looking at private sector participation from potential miners, financial institutions as well as customers to fund the project.

"We have to have the off-takers, the miners, the railway; the overall logistics system is going to be fundamental to making this line work, and that would include specific customers, and the various parts of the supply chain. They (the customer) could be part of the consortium or they could be a part of the Special Purpose Vehicle if we end up with the PPP model."

In October 2017, Thomson Reuters Projects reported that PAM would look to grant mining licenses to investors who can finance the mineral railway.

In March 2017, a report by Thomson Reuters Projects quoted an Oman Rail official as saying the option of using the original plan of turnkey engineering, procurement and construction (EPC) remained on the table, adding that the company had already pre-qualified 17 international EPC contractors.

(Reporting by Anoop Menon; Editing by Michael Fahy)


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